We are Hanno Beck, Lindy Davies, Fred Foldvary, Mike O'Mara, Jeff Smith, and assorted volunteers, all dedicated to bringing you the news and views that make a difference in our species struggle to win justice, prosperity, and eco-librium.
This 2013 excerpt of the New York Times, Nov 7, is by Ron Nixon.
The federal government paid $11.3 million in taxpayer-funded farm subsidies from 1995 to 2012 to 50 billionaires or businesses in which they have some form of ownership.
The billionaires who received the subsidies or owned companies that did include the Microsoft co-founder Paul G. Allen; the investment titan Charles Schwab; and S. Truett Cathy, owner of Chick-fil-A. The billionaires who got the subsidies have a collective net worth of $316 billion.
The findings likely underestimate the total farm subsidies that went to the billionaires on the Forbes 400 list because many of them also received crop insurance subsidies. Federal law prohibits the disclosure of the names of individuals who get crop insurance subsidies.
Congress is debating a House proposal that would cut nearly $40 billion over 10 years from the food stamp program, which helps provide food for nearly 47 million people. A Senate provision would cut $4.5 billion over the same period.
Food stamps kept about five million people above the poverty line last year. The food stamp program was cut by about $5 billion on Nov. 1.
Proposed bills would allow billionaires to get even more in subsidies, all without taxpayers knowing who they are, while imposing draconian requirements on low-income people.
Ed. Notes: Hungry people outnumber billionaires by millions yet exercise nearly no power in America’s so-called democracy. But that’s not unusual. Everywhere, forever, in all times and places, the role of government has not been to serve the people in its entirety but to serve the ruling elite, whether an owning class in a capitalist country or a ruling party in a “communist” country. The only thing that can change the situation is not demanding a bandaid fix but demanding an end to politicians getting to spend all our public revenue and a beginning of every citizen getting a fair share of the common wealth. That’s how to put an end to such vile injustice. And it’s called geonomics.
This 2013 excerpt of Quartz, Spt 6, is by Gwynn Guilford.
Chinese local governments hit the jackpot this week. In Beijing, Shanghai, Hangzhou and Suzhou, land parcels sold for record prices, crowning a slew of new “land kings,” as Chinese slang refers to record-setting plots.
In Beijing, a residential land parcel near the city’s embassy district commanded 73,000 yuan ($11,900) per buildable square meter, or about $1,100 per buildable square foot. For comparison, the most expensive property deal in Manhattan in 2013 fetched $800 per buildable square foot; the average for 2012 was $323.
Why is Beijing more expensive than Manhattan?
Is Beijing supply scarce? Actually, it could mean the opposite. Price rises could be due more to speculation than to a dearth of supply. Even though swanky high-rises are getting more expensive in Beijing, their sales in smaller cities are flagging, suggesting that genuine demand is weak.
Per capita housing stock hit 35 sq m in 2011, and is rising by 1.2 sq m a year, putting China in the same league as many wealthy countries. Demand in mega-cities like Beijing and Shanghai can probably absorb any excess supply. But oversupply is already hitting smaller cities, and as demand flags, prices there have started to fall.
Ed. Notes: Sure, speculators add their bids to demand and keep some of their land out of supply — that’s a big part of the story. The other part is population density. Nowhere is denser than China. Close to 1 of 5 humans are Chinese and China is smaller than America. All those people needing sites for homes and business push up location value sky-high.
While that’s a curse for those who can’t afford the land, it needn’t be. All government need do is not sell land but lease it and renegotiate the leases after short periods of time. The land it already sold it can tax or levy land-use fees or charge Land Dues. Doing that would drive out the speculators. With the revenue, government could pay a dividend, as does Singapore, and that’d enable residents to afford to live there. Then as ground rents rise due to true demand and/or limited supply, the increases in spendiness would benefit everyone.
Following such a geonomic policy, Beijing would be ahead of Manhattan in more ways than one.
The Unique Genius of Hong Kong’s Public Transportation System: The use of a clever financing system has enabled the territory to provide world-class service without breaking the bank.
This 2013 excerpt of The Atlantic, Spt 10, is by Neil Padukone.
Hong Kong’s Mass Transit Railway (MTR) Corporation, which manages the subway and bus systems on Hong Kong Island and, since 2006, in the northern part of Kowloon, is considered the gold standard for transit management worldwide. In 2012, the MTR produced revenue of 36 billion Hong Kong Dollars (about U.S $5 billion)—turning a profit of $2 billion in the process. Most impressively, the farebox recovery ratio (the percentage of operational costs covered by fares) for the system was 185 percent, the world’s highest. Worldwide, these numbers are practically unheard of —- the next highest urban ratio, Singapore, is a mere 125 percent.
In addition to Hong Kong, the MTR Corporation runs individual subway lines in Beijing, Hangzhou, and Shenzhen in China, two lines in the London Underground, and the entire Melbourne and Stockholm systems. And in Hong Kong, the trains provide services unseen in many other systems around the world: stations have public computers, wheelchair and stroller accessibility (and the space within the train to store them), glass doors blocking the tracks, interoperable touch-and-go fare payment (which also works as a debit card in local retail), clear and sensible signage, and, on longer-distance subways, first-class cars for people who are willing to pay extra for a little leg space.
How can Hong Kong afford all of this? The answer is deceptively simple: “Value Capture.”
Like no other system in the world, the MTR understands the monetary value of urban density. Hong Kong is one of the world’s densest cities, and businesses depend on the metro to ferry customers from one side of the territory to another. As a result, the MTR strikes a bargain with shop owners: In exchange for transporting customers, the transit agency receives a cut of the mall’s profit, signs a co-ownership agreement, or accepts a percentage of property development fees. In many cases, the MTR owns the entire mall itself. The Hong Kong metro essentially functions as part of a vertically integrated business that, through a “rail plus property” model, controls both the means of transit and the places passengers visit upon departure. Two of the tallest skyscrapers in Hong Kong are MTR properties, as are many of the offices, malls, and residences next to every transit station (some of which even have direct underground connections to the train). Not to mention, all of the retail within subway stations, which themselves double as large shopping complexes, is leased from MTR.
MTR’s financial largesse means that the transit system requires less maintenance and service interruptions, which in turn reduces operating costs, streamlines capital investments, and encourages more people to use transit to get around. And more customers means more money, even if fares are relatively cheap: most commutes fall between HK $4 and HK$20 (about 50 cents to $3), depending on distance. (In London, by comparison, a Tube journey can cost as much as $18).
Ed. Notes: A transit agency need not own real estate, not if it has the power to recover the land values that arise around its stops and stations (or if the local government recovers those “ground rents” via a tax or fee or dues on behalf of the metro system).
This model of self-financing could be used for all infrastructure, not just transit, and for other public programs, too, like parks. All those improvements increase nearby location value and, if the improvement is truly desired by the public, they increase the value of the site by more than the cost of the project. Some big name economists (Stiglitz, Vickrey) noted this phenomenon and called it the “Henry George Theorem”, after the 19th c. reformer then famous for advocating a single tax on land value.
And it’s not just public works that lift locational rents but also private works, like a private school, a popular shopping district, and in the old days a church (a big speculating landowner would donate land to the faithful for building a church, knowing its followers would move in and push up site values). In general, society has generated so much land rent — and continues to do so daily — that if all were recovered (by dues, taxes, fees, whatever), it’s enough to fund any truly desired public service plus pay citizens a dividend. We just need to apply the lesson of Hong Kong to reforming public revenue to the max.
This 2013 excerpt of Business Insider, Nov 21, is by Rob Wile.
Where is America heading? Last year’s inaugural U.S. 20 list featured things like the end of retail, the revival of manufacturing, and the shale revolution.
Believe it or not, it wasn’t difficult at all to come up with 20 brand new trends this year that will dominate headlines over the next decade. It’s not that all of last year’s forces have already dissipated. But new movements have already sprung up.
The 2013 list includes two new geographic centers of the American economy, evolving patterns of relationships, robots, and the changing energy landscape.
Ed. Notes: Of the 20 trends, there are the expected ones about hot spots (San Francisco), energy (renewables), and progress (robotics) and the unexpected ones about the new matriarchy, the new soloists, and the lost homeowner. If such changes come to pass, will they make you happier? Is there anything you can do to guide change? Sure. Work for justice.
This 2013 excerpt of Salon, Spt 6, is by Leah A. Plunkett.
Governments are raising revenue by quietly taxing a group even more cash-strapped than they are: the poor.
Counties and states nationwide are sending out bills for services that are often involuntary: charging directly for the costs of certain governmental services traditionally paid for by the public as a whole (e.g., in the case of misfortune: emergency services).
Once services have been used, the government then bills the user for their cost. If payment isn’t made in full and on time, the user’s debt will likely grow through the addition of interest, late fees, and other penalties.
Here are four secret taxes on the poor:
1. Emergency Response Services: A trip in the ambulance or a visit from the fire department can now result in bills for thousands of dollars.
2. Unemployment Benefits: States may make access to this money quite expensive when benefits are provided on debit cards with hefty fees attached that users have to pay.
3. “Pay-to-Stay” Programs: Counties nationwide are charging inmates for the cost of their own room-and-board while they’re in prison, even for the cost of their public defender.
4. Parental Reimbursement Programs: Parents of kids who get into trouble with the law are often required to foot the bill for the government’s attempts to rehabilitate their children.
These “poor taxes” are going to pay for services that support all of us.
Ed. Notes: Is what’s wrong that the poor get charged or that there’s poverty in the first place? Paying one’s way, quid pro quo — that seems fair. What’s not fair is an economic policy that keeps people in poverty. Governments could end poverty — that both citizens and governments experience — by doing things like ending corporate welfare, ending taxes on wages, recovering all the values that society creates, such as the value of locations, and disbursing the recovered revenue to the members of society. Problem solved.
A 2013 excerpt of a US Bureau of Economic Analysis press release, Nov 21.
Americans’ personal income growth slowed in 2012 in most of the nation’s 381 metropolitan statistical areas (MSAs). On average, MSA personal income rose 4.2 percent in 2012, after growing 6.0 percent in 2011. Personal income growth ranged from 12.1 percent in Midland, Texas to -1.6 percent in Yuma, Arizona.
Midland, Texas was the fastest growing MSA, in terms of personal income, for the third year in a row. Odessa, Texas, which grew 11.5 percent, was second fastest, as it was in 2011. For both MSAs, the mining industry, which includes oil and gas extraction, contributed more than any other industry to personal income growth. North Dakota’s three MSAs were also among the fastest growing MSAs in the country in 2012. Personal income in the nonmetropolitan portion of North Dakota—where the booming mining industry is located—grew at an even faster 26.3 percent pace.
Declines in farm and military earnings, which were relatively small nationally, accounted for the personal income declines in four of the five slowest growing MSAs.
Among the 52 MSAs with a population of one million or more, professional services [lawyering, doctoring, etc], the largest industry in the large MSAs, contributed most to personal income growth in 2012.
Personal income grew 3.7 percent in nonmetropolitan counties, compared to 4.2 percent growth in metropolitan counties. The slower growth of the nonmetropolitan counties reflects the much lower earnings power of farming and government services. Nationally, farm earnings fell 1.2 percent while earnings in the private nonfarm sector grew 5.1 percent.
Ed. Notes: It didn’t say if the numbers were correctly for inflation which tends to double prices in the US every quarter century. Did you note the role of land including resources in wages? Demand for oil, a non-renewable, pushes up those salaries. But demand for food, which is reproduced every harvest, did not push up those salaries. And places where population density is greatest, salaries are highest, not just because that’s where lawyers and the like live but also because density delivers efficiency of scale so more profit can be made. So, to strike your fortune, live in a big city. But to balance work and play, live in the country where the cost of living is lower and your Citizen’s Dividend would go much further — once we as a society start sharing the worth of Earth and pay ourselves the extra income.
This 2013 excerpt of the New York Times, Aug 24, is by Mary Pilon.
Monopoly Empire, the latest flavor of the iconic game, substitutes traditional Atlantic City property names with those of large corporations — McDonald’s, Coca-Cola, Samsung, Nestlé, etc. In the latest Monopoly game, players acquire key brands to create corporate empires rather than try to bankrupt their opponents. And the old tokens — the racecar, thimble and top hat that used to race around the board — have been replaced by a 2014 Corvette Stingray, an Xbox controller and a Paramount Pictures movie clapboard.
Ironically the game was created to critique, not celebrate, corporate America. Contrary to popular board game lore, Monopoly was invented not by an unemployed man during the Great Depression but in 1903 by a feminist who lived in the Washington, D.C., area and wanted to teach about the evils of monopolization. Her name was Lizzie Magie.
Seventeen years before women could vote, Ms. Magie, a fiery stenographer, poet, sometime actress and onetime employee of the United States Postal Service’s dead-letter office, ginned up a game that mirrored what she perceived to be the vast economic inequalities of her day. She called it the Landlord’s Game and saw it as an educational tool and gamy rebellion against the era’s corporate titans, John D. Rockefeller Sr., Andrew Carnegie and J. P. Morgan.
Ms. Magie was an ardent follower of Henry George, who advocated a single tax on land [which would fall most heavily on downtowns where locations are by far the steepest].
Rexford G. Tugwell, a Columbia University professor and member of Franklin D. Roosevelt’s “brain trust,” played and taught the game. Members of the administration of Mayor Fiorello H. La Guardia of New York played it, as did Ernest Angell, an attorney and chairman of the board at the American Civil Liberties Union.
On November 26, 2013, The Vatican press published the apostolic exhortation, “The Joy of the Gospel.” The text was written in Spanish, and its full title in the English translation (converted here from upper case to initial capitals) is “Evangelii Gaudium of the Holy Father Francis to the Bishops, Clergy, Consecrated Persons and the Lay Faithful on the Proclamation of the Gospel in Today’s World.” Besides its religious calls, Pope Francis makes statements about today’s economic problems, and calls for greater economic justice.
One of the aims of this proclamation is to point out “new paths for the Church’s journey in years to come.” One of the questions the Pope seeks to discuss is “the inclusion of the poor in society.” Chapter Two is entitled, “Amid the Crisis of Communal Commitment.” In paragraph 52, Francis writes that “today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills… Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless.”
The Pope is wise and correct in seeing the harm done by inequality, but I urge him to see past the appearances to study the underlying reality. What provides the powerful with their might? The state has the ultimate power of force, and by its power to tax, to restrict, to mandate, and to subsidize, the state endows the powerful with the means to feed on the powerless. Market competition as such cannot impose force, and it does not create poverty. In a free society, each person has the power to be employed and pursue happiness. In a truly free market, all are fit to survive, because workers have access to natural opportunities. It is government intervention that stops this access.
Paragraph 54 is the key, widely cited, economic passage. We need to be sure that the English version is true to the original Spanish. In Spanish, Francis wrote, “algunos todavía defienden las teorías del « derrame », que suponen que todo crecimiento económico, favorecido por la libertad de mercado, logra provocar por sí mismo mayor equidad e inclusión social en el mundo.”
The Vatican’s English translation says, “some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world.”
The English-edition term “trickle-down theories” is translated from the Spanish, “teoria del derrame.” “Derrame” means a slow leak, hence a trickle, and so the English translation is accurate. The translated term “free market” is more literally “the liberty of the market” in the original Spanish, but the meaning is the same.
As noted by Harvard professor Greg Mankiw in his blog, critics of markets often use the term “trickle down” as a pejorative for the effects of a market economy. There is indeed a trickle down effect, for example, when a tourist resort is built in a location with many poor people, where a few get hired to work to clean rooms and wash dishes. A bit of the wealth of the resort trickles to the local population. But this situation does not confront the issue of why the poverty exists in the first place.
The theory of the free market is not one of “trickle down.” A truly free market is a fountain that gushes up wealth for all. Moreover, economic growth in market economies has indeed raised millions of persons up from poverty. However, the theory of market-driven growth does not claim that growth brings justice. The causation is the opposite: economic justice promotes growth. Moreover, justice and liberty are two faces of the same coin, so if a market has liberty, it must also provide justice.
The Pope continues: “This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.”
But the proposition that free markets provide growth that benefits all is not a mere opinion. The proposition is a theory of growth that was first analyzed by the French economists of the 1700s, who concluded that the unhampered market, with free trade, would provide the greatest prosperity for all.
The prescription of the French economists was to abolish taxes on labor and trade, and instead use the surplus of the economy, which is land rent, for public revenue. Adam Smith in his Wealth of Nations brought this theory into classical economics. The American economist Henry George a century later explained in detail how land rent captures the gains from economic progress, and how growth generates inequality and poverty if that rent is not equally shared.
Markets have had various degrees of freedom, but there is no truly free market in the world today. Those who advocate a pure free market do not defend the “prevailing economic system,” but rather, they seek to stop the state’s subsidy of economic powers. The greatest subsidy and economic power is the land rent generated by the public goods provided by government.
The Pope is correct in decrying “the denial of the primacy of the human person” (paragraph 55) and that “Behind this attitude lurks a rejection of ethics” (57). Ethics and the primacy of the human person requires the equal right of each person to pursue happiness without harming others and to keep the earnings of his labor, as recognized by the commandment, “Thou shalt not steal.” Ethics must also respect the equal sharing of the benefits of nature and community, as stated in Ecclesiastes 5:9, “the profit of the earth is for all.”
The heart of economics is the understanding of the root cause of poverty: the forced redistribution of wealth from the working poor to the landed rich. This is caused not by markets but from state policy. It is good that Pope Francis seeks to remedy poverty. His “new path” should be to go more deeply into the economics and politics of maldistribution.
Millions are required to fight conflagrations such as the Rim fire in and around Yosemite. But what about fire prevention?
This 2013 excerpt of the Los Angeles Times, Spt 6, is by Jamie Simons.
A fire like the Rim fire burned almost 400 square miles, in and around Yosemite. Fueled by dense thickets of pine needles, undergrowth and fallen trees, fires like this one do not move slowly along the ground, clearing the underbrush but leaving parts of the forest intact. Instead, the flames leap through the crowns of trees, creating infernos that are hard to suppress and denude wide swaths of forest floor, making the terrain more susceptible to erosion by winter snow and rain. Even the mighty sequoias, able to withstand most fires and even thrive because of them, are threatened by a crown fire’s staggering heat.
It doesn’t have to be this way. For thousands of years the Indians who made Yosemite their home set small fires to prevent such cataclysmic events. Contained and manageable, their fires turned Yosemite Valley into a meadow that attracted deer for hunting and kept people safe.
For decades, the federal government took the opposite approach. Worried about having to divert men away from the war and into the forests to fight fires during World War II, the U.S. Forest Service and War Advertising Council created the Smokey Bear character. What followed were decades of fire suppression and teaching Americans that fires must be avoided at all costs. The result has been an unprecedented buildup of combustible fuels that has fed massive fires across the West in recent years.
In the late 1980s, the government realized the danger of this approach and began the practice of brush clearance and controlled burns in strategically located parts of the national forests and parks. But even though the practice has brought success where it has been used, we are still more oriented to fighting fires than to preventing them. Big fires are terrifying, and the Forest Service is under tremendous pressure to put them out at all costs. Right now, fighting forest fires comes with a virtual blank check.
After years of living in Yosemite National Park, I learned that, contrary to the teachings of Smokey Bear, fire can be a welcome force for good. It rejuvenates the forest. It clears the way for richer, more diverse habitat. It is essential in the life cycle of the giant sequoia. And if you live in the mountains, surrounded by forests piled high with tinderbox-dry debris, nothing helps you sleep more soundly at night than being in an area that’s been burned.
Those people involved in fighting wildland fires know that managed burns, tree thinning, brush clearance — even letting wildfires burn themselves out when no people or structures are at risk — are the best tools in their arsenal when it comes to preventing future wildfires.
The Rim fire has so depleted the Forest Service’s firefighting budget that it had to borrow from money set aside for fire prevention. So far, just this one fire has seen 5,000 firefighters on the line with a price tag that is at $75 million and growing. Working with those same numbers, it boggles the mind to think of how much good could have been done throughout the United States to prevent these kinds of massive wildfires.
Ed. Notes: In some Brazil, some towns put their budgets on the ballot, so voters can decide what programs to fund. Could that work for a big country, too? Maybe put five or so broad categories on the ballot. It’d at least give politicians some guidance.
Urban density in all the wrong places — thanks to the planner’s delight, an urban growth boundary?
This 2013 of Australian Property, Nov 20, is by Leith van Onselen.
Measures aimed at excluding growth from one part of Melbourne -– as via the fixed urban growth boundary (UGB) -– will naturally generates pressure to accommodate it elsewhere, leading to intensified development either on the fringe or in exurban and underdeveloped jurisdictions well beyond the metropolitan limits.
Melbourne’s UGB will likely encourage many lower income households to ‘leapfrog’ the boundary and settle in far flung commuter towns where developable land is available and housing is more affordable. In such instances, urban sprawl will be exacerbated and reliance on cars and energy use will be increased. Since Melbourne’s UGB was first introduced in the early-2000s, we have already seen widespread development in communities well beyond the UGB.
A related unintended consequence of Plan Melbourne is that ‘densification’ will also be pushed away from the inner and middle suburbs and onto the fringe, where there is less access to employment and amenities. The price of land will be forced up so much by the growth constraints that households will be less able to afford the ‘premium’ price commanded by the inner areas, and will instead be forced to locate at ‘less unaffordable’ but also less efficient locations.
Look at Portland Oregon -– often cited as a model for “smart growth”. There, urban consolidation policies have driven increased density at the fringe of the city but not nearer to the CBD, as revealed by Alain Bertaud, senior research scholar at the NYU Stern Urbanization Project.
Market forces would normally increase population density around the CBD and decrease it progressively toward the suburbs.
Ed. Notes: The political approach of “just say no” was ridiculed by progressives when Nancy Reagan urged teens to say “no” when tempted by drugs, but the same progressives embrace it when they want to halt sprawl. It didn’t work for Nancy, and it didn’t work for planners. Yet there is a policy that does work.
To spure builders to use land efficiently, one must stop the speculators from misusing land inefficiently. Builders need land but they don’t need it beyond cities, there’s plenty of buildable land within cities. Now it lies fallow as vacant lots, parking lots, sites with abandoned buildings or short, old buildings woefully inadequate for a bustling downtown.
To spur speculators to put their land to best use, have the city recover the value of land — which is socially-generated anyway and morally should be the residents’ common wealth. When owners pay over the land rent as a land tax or Land Dues or land-use fee, then they get busy and put their locations to best use in order to afford the charge. By developing their sites, they absorb all or most of the demand for new buildings, so there’s little leftover to appear on the fringe.
It’s not necessary or even feasible to stop sprawl by drawing a line in the sand. What’s necessary and rational is to recover the socially-generated value of locations. Then you’ll have the car-freest, most livable cities in the world.
Among adults who grew up in the bottom half of the income distribution, only one out of 25 had family income of at least $100,000 by age 30. But one of every three 30-year-olds who grew up in the top 1 percent of the income distribution was already making at least $100,000 in family income.
This 2013 excerpt of the New York Times, Jly 22, is by DavidLeonhardt.
Climbing the income ladder occurs less often in the Southeast and industrial Midwest, with the odds notably low in Atlanta, Charlotte, Memphis, Raleigh, Indianapolis, Cincinnati, and Columbus. By contrast, some of the highest rates occur in the Northeast, Great Plains, and West, including in New York, Boston, Salt Lake City, Pittsburgh, Seattle, and large swaths of California and Minnesota.
That variation does not stem simply from the fact that some areas have higher average incomes: upward mobility rates often differ sharply in areas where average income is similar, like Atlanta and Seattle. Fairly poor children in Seattle —- those who grew up in the 25th percentile of the national income distribution -— do as well financially when they grow up as middle-class children -— those who grew up at the 50th percentile -— from Atlanta.
In Atlanta, concentrated poverty, extensive traffic, and a weak public-transit system make it difficult to get to the job opportunities.
Four broad factors affect income mobility, including the size and dispersion of the local middle class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were more dispersed among mixed-income neighborhoods.
Income mobility was also higher in areas with more two-parent households, better elementary schools and high schools, and more civic engagement, including membership in religious and community groups.
Larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly. There’s only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region.
Children who moved at a young age from a low-mobility area to a high-mobility area did almost as well as those who spent their entire childhoods in a higher-mobility area. But children who moved as teenagers did less well.
Ed. Notes: To change cities from habitats for cars to habitats for people, you could change land from an object of speculation to a source of common wealth. Where owners pay a land tax (or could be Land Dues or land-use fees), they can’t afford to speculate so they keep their land at best use. Their individual acts of development add up to in-filling the city, making it more compact, which makes mass transit (getting to work) more efficient.
New development adds to the stock of buildings, both residences and businesses, so neighborhoods have more variety of goods and services. Living in a city that’s pretty and fun gives residents some civic pride, which leads to civic involvement. Pretty soon they’ll have all the ducks in a row to make upward mobility easier and commonplace.
When Denmark shifted to a land tax (1957, an article also in the New York Times), workers received their biggest raise in pay in Danish history, proof that this revenue reform works.
This 2013 excerpt of Alternet, Nov 20, is by David Dayen of Salon.
JP Morgan Chase’s long-awaited $13 billion deal with the Justice Department is not a $13 billion deal. $4 billion of this figure was the conclusion of a lawsuit between JPMorgan and the Federal Housing Finance Agency. So, let’s talk about this $9 billion settlement.
Nearly half of the figure comes in the form of “mortgage relief” that the bank has four years to distribute. Any time you extend the time horizon of a penalty, you’re reducing its real value.
The bank only has to put $1.2 billion of the $4 billion into first-lien principal reductions for homeowners facing foreclosure, which is less than JPMorgan Chase’s obligation under the original foreclosure fraud settlement. Now $300 million goes toward extinguishing second liens, like a home equity line of credit. Another $300 million is earmarked for principal forbearance, where the homeowner still owes the money but gets to skip a few immediate payments. $2 billion would go toward interest-rate reductions or refinancing or even writing new mortgages for moderate-income borrowers (that’s a penalty, writing mortgages that pay the bank interest?), and the balance toward anti-blight provisions like bulldozing homes or buying out properties where the bank has delayed foreclosure.
Almost none of this represents a real penalty for the bank. It performs anti-blight procedures annually in its normal course of business. Principal forbearance has minuscule long-term cost. Second liens that typically cannot be recouped are worthless to a bank, and it’s hard to say it “costs” anything to extinguish them. The bank is even credited for writing down principal on loans owned by mortgage-backed securities investors, paying off their fine with other people’s money (the other people in this case being the very investors they defrauded!). And all the measures to help struggling homeowners actually help JPMorgan Chase in the long run, because it makes financial sense to modify loans rather than foreclose.
Meanwhile, almost all of the deal, save a $2 billion penalty to the U.S. Attorney’s Office in Sacramento to settle a civil lawsuit, is tax deductible as a business expense. Assuming a 38 percent rate for deductions (as JPMorgan does) on $7 billion in business expenses, this knocks another $2.66 billion off the real cost to JPMorgan Chase. A ballyhooed $13 billion settlement winds up being closer to $2.74 billion.
It’s impossible for the punishment to fit the crime here, in monetary terms. If you calculate the actual harm done through fraud in the housing market and the impact on the broader economy, JPMorgan and its fellow banks would owe more money than they could ever scrounge up. Jail sentences for those who authorized and directed the conduct could at least create a deterrent for the future.
The bank settled mortgage-backed securities claims with private investors just last week. The long delay in finalizing the settlement with the Justice Dept. kept the facts from being used against them in the other cases.
Ed. Notes: This bad behavior by banks will go on as long as we keep giving them so much of our money, especially our common wealth, our spending for land and resources, a torrent of spending that we should keep in our communities, where it can compensate each of us for keeping off the land of all the rest of us. Further, it is community features that generate site value — views, crime rates, etc — so it is the community that deserves to keep locational value circulating within its borders. Collecting site value from owners will spur them to keep their land at best use while paying shares of collected “rents” will empower residents to live securely, having their economy serve them rather than they serve it.
Malaysia has cut fuel subsidies for the first time in more than two years. The government spent 24bn ringgit on fuel subsidies last year, which contributed to a widening budget deficit. The high budget deficit was one of the factors that lowered Malaysia’s credit rating from stable to negative.
The change also comes at a time when Asia’s emerging economies have been hit by investors pulling their money out. The pull-out has been triggered by speculation that the US central bank will soon begin to cut back on the amount of money it is pumping into the economy.
Malaysia, which has seen its currency, the ringgit, decline by nearly 10% against the US dollar since May.
Ed. Notes: It was to help the people, some of whom are poor, that the government of Malaysia — a place of lots of sun and oil where even a little poverty makes no sense — first put those subsidies in place. Having taken them out, now what will the government do for anyone needy? One huge help would not be to not fund programs like cheap fuel from taxes on people’s income and spending but instead to fund a dividend, that people could spend on anything, funded from taxes, fees, and dues on the value of land and resources.
A system of charges-plus-dividends would redirect the society’s spending for nature from the pockets of absentee owners, speculators, and lenders, into the pockets of everyone. Most people would be better off having to pay Land Dues while getting back “Rent” Dividends. And those wealthy few whose Land Dues would exceed their Rent Dividends, they could be compensated by an end to taxes on enterprise. They could earn income not by collecting tolls from others for the use of nature but by actually growing the economic pie, by investing in more efficient capital goods and in a better educated labor force.
Getting their share of the nation’s land rent, each citizen could spend their dividend however they saw fit, whether on fuel or not. Some will spend it on alternative transportation, which would stimulate that sector of the economy plus improve their environment. And, getting a dividend while not having to pay taxes on their wages and purchases, the poor could lift themselves up out of poverty, into a growing middle class, rather than simply lose a handout as now.
We should be challenging the privileges and entitlement culture, and the ever-widening gap between rich and poor. Labour Leader Johann Lamont signals her support for a new tax plan. The worsening impact on public services highlights the long-running council tax freeze.
These three 2013 excerpts endorsing the public recovery of land value are of: (1) The Scotsman, Spt 14, by Gerry Hassan; (2) The Scotswman, Spt 22, by Eddie Barnes; and (3) Hearald Scotland, Nov 2, by Magnus Gardham, Political Editor.
Bedroom tax hides more serious issues
Scotland is a land where many people are struggling to buy the most basic essentials of life, while others at the top have never had it so good. Oxfam Scotland’s recent Our Economy report found that the gap between the richest and poorest 10 per cent of households was 1:273. The Scottish Government’s council tax freeze, according to research by Unison, has given those in the most expensive Band H properties a discount of £441 per year, while only aiding those in the lowest band properties by £147 per year: effectively a distribution to those who already have the most.
The idea of power has to be addressed –- who has it, why and what the consequences of this are. Related to this is the limited nature of democracy which has seen the centralisation of public bodies and decision making. There is a direct link between this and the increasing concentration of wealth and income in fewer hands; the narrow realm of what it is possible to talk and act on in Scotland’s truncated democracy aids the rule of the rich and powerful.
Public finances need to be sorted – national taxes, local taxes and a land value tax introduced. As an interim measure, the council tax top bands could be raised to bring in additional resources from the richest group of householders: we could even call it a Scottish solidarity tax.
Labour leader Johann Lamont signals support for land tax
This tax is paid on the value of the land that people own, rather than the property on it. Backers, such as the Scottish Greens, say the reform would cut bills on council-tax while also bringing an end to damaging speculation such as that seen before the 2008 crash.
Johann Lamont said it was “almost impossible” to begin a debate about tax reform when the levels of trust in politicians was so low.
Business Secretary Vince Cable told the Liberal Democrat conference in Glasgow last week that a land tax in England was also being considered by the UK coalition government.
Three years ago, a paper for the Scottish Greens written by land-reform campaigner Andy Wightman concluded that a tax of 3.16p in the pound would be enough to replace the council tax and the uniform business rate in Scotland.
Wightman said such a tax would reduce “urban blight” and “land banking”, and would benefit business.
The Scottish Government’s enthusiasm for the council tax freeze, now in its seventh year, has rather obscured the fact it began life as a stop-gap measure until the planned local income tax could be introduced.
Successive Labour/LibDem administrations had taken the view that while the council tax wasn’t too broke (people weren’t rioting, at least) then it didn’t really need fixing.
Despite its faults the council tax has become extremely useful. It’s become a pillar of the Scottish Government’s “social wage”. No wonder the council tax freeze looms over every election fought in Scotland.
By and large the better off continue to benefit disproportionately from freezing bills while councils face a growing problem providing services which, by and large, the less well off rely upon.
Labour have voiced tentative support for a land value tax, a levy on the value of the land you occupy rather than the house standing on it.
Ed. Notes: Scotland’s, England’s, and the rest of the British Isles’ leaders lead the world in discussing the public recovery of socially-generated locational values for the benefit of all members of society; may the rest of the world catch up!
This 2013 excerpt of “What It Will Take to Counter Extremism and Engage Americans in the Fight against Global Warming”, January, is by Theda Skocpol of Harvard University; prepared for the Symposium on THE POLITICS OF AMERICA’S FIGHT AGAINST GLOBAL WARMING, co-sponsored by the Columbia School of Journalism and the Scholars Strategy Network, Feb 14. Skocpol has been called one of the top political scientists in the US.
Cap and dividend has the clear potential to launch reinforcing feedback loops as well, attracting voter support and enhancing the leverage of the businesses and reform organizations that have an interest in completing America’s transition to a green economy.
But for strategists who suspect that more of the same kind of politics will not work, cap and dividend approaches hold the possibility of constructing a new political movement in the next few years. A carefully organized drive for cap and dividend might well bring together environmental advocates, green businesses, and many unions and citizen associations to support the enactment of carbon-emissions caps and the subsequent ratcheting-up of the tax levels to ensure that the United States completes a transition to a green economy, with ordinary citizens reaping economic benefits along the way.
Values and moral vision would inspire action, of course, but so would pocketbook payoffs for most families and future-oriented businesses.
Ed. Notes: Having the people get the revenue rather than the politicians get it might avoid creating any constituency for the carbon tax or fee. While a majority of politicians might want more carbon emissions in order to swell the funds they get to spend, would a majority of the public likewise want more alteration of the atmospheres and the calamities that go with it?
Practical politics aside, when people get paid a dividend then they get compensated, at least monetarily, for having to endure a degraded world. People do have a right to a planet in a healthy condition. Earth’s health — plus her worth — are our common heritage.
Back to practical politics … Since the dividend can get a carbon charge passed — as it did in British Columbia — shouldn’t advocates for land taxes or Land Dues or land-use fees also advocate for a dividend in order to get a majority of voters to accept their favorite levy? You’d think so but in the world of politics — which attracts true-believers of every stripe — you never know.
suitable for framing by Green Parties. When Greens began in Germany two decades ago, they defined themselves as neither left nor right but in front. Geonomics fits that description. The Green Parties have their Four Pillars; geonomists have four ways to apply them:
Ecological Wisdom. Want people to use the eco-system wisely? Charge them Rent and, to end corporate license, add surcharges. To minimize these costs, people will use less Earth.
Nonviolence. Want people to settle disputes nonviolently? Set a good example; don’t levy taxes, which rely on the threat of incarceration, to take people’s money. Try quid pro quo fees and dues.
Social Responsibility. Want people to be responsible for their actions? Don’t make basic choices for them by subsidizing services, addicting them to a caretaker state. Let people spend shares of social surplus.
Grassroots Democracy. Better have grassroots prosperity. Remember, political power follows economic. Pay people a Citizens Dividend; to keep it, they’ll show up at the polls, public hearings, and conventions.
a neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heritage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a dividend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jefferson suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
the policy that the earth’s natural patterns suggests. Use the eco-system’s self-regulating feedback loops as a model. What then needs changing? Basically, the flow of money spent to own or use Earth (both sites and resources) must visit each of us. Our agent, government, exists to collect this natural rent via fees and to disburse the collected revenue via dividends. Doing this, we could forgo taxes on homes and earnings and subsidies of either the needy or the greedy. For more, see our web site, our pamphlet of the title above, or any of our other lit pieces; ask for our literature list.
not a panacea, but like John Muir said, “pull on any one thing, and find it connected to everything else.” Recall last month’s earthquake in El Salvador. We felt it and its formidable after-shocks in Nicaragua. Immediately afterwards, my host nation, one of the poorest in the Western Hemisphere, sent aid to its Central American neighbor. The Nica newspapers carried photos of the devastation. They showed that the cliff sides that crumbled had had homes built on them while the cliffs left pristine withstood the shock. Could monopoly of good, safe, flat land be pushing people to build on risky, unstable cliffs? If so, that’s just one more good reason to break up land monopoly. What works to break up land monopoly, history shows, is for society to collect the annual rental value of the underlying sites and resources. That’d spur owners to use level land efficiently, so no one would be excluded, forced to resort to cliffs. To prevent another man-induced landslide is yet another reason to spread geonomics.
shaped by reality. In the 1980′s, the Swedish government doubled its stock transfer tax. Tax receipts, however, rose only 15%, since traders simply fled to London exchanges. Fearing a further exodus, the Swedish government quickly rescinded the tax altogether. (The New York Times, April 20) That willingness to tax anything leads us astray. Pushing us astray is that unwillingness to pay what we owe: rent for land, our common heritage. Assuming land value is up for grabs, we speculate. We cap the property tax on both land and buildings and the rate at which assessments can go up; while real market values rise quicker, assessments can never catch up. Our stewards, the Bureau of Land Management, routinely sell and lease sites below market value, often to insiders, says the Government Accounting Office. Once we grasp that rent is ours to share, we’ll collect it all, rather than let it enrich a few, and quit taxing earnings, which do belong to the individual earner. That shift is geonomic policy.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part and parcel of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
an answer for Jonathan of the Green Party (Nov 7): “What does ‘share our surplus’ mean?”
Our surplus is the values that society generates synergistically. It’s the money we spend on the nature we use: on land sites, natural resources, EM spectrum, ecosystem services (assimilating pollutants). It’s also the money we pay to holders of government-granted privileges like corporate charters. We could share it by paying for the nature we use and privileges we hold to the public treasury then getting back a fair share of the recovered revenue. Used to be, owners did owe rent (“own” and “owe” used to be one word). And presently, some lucky residents do get back periodic dividends: Alaska’s oil dividend and Aspen Colorado’s housing assistance. Doing that, instead of subsidizing bads while taxing goods, is the essence of geonomics.
Jonathan: “Is local currency what you mean?”
Editor: It’s not. Community currency is a good reform, but every good reform pushes up site values. That makes land an even more tempting object of speculation. Now, any good will eventually do bad by widening the income gap – until you share land values.
the study of the money we spend on the nature we use. When we pay that money to private owners, we reward both speculation and over-extraction. Robert Kiyosaki’s bestseller, Rich Dad’s Prophecy, says, “One of the reasons McDonald’s is such a rich company is not because it sells a lot of burgers but because it owns the land at some of the best intersections in the world. The main reason Kim and I invest in such properties is to own the land at the corner of the intersection. (p 200) My real estate advisor states that the rich either made their money in real estate or hold their money in real estate.” (p 141, via Greg Young) When government recovers the rents for natural advantages for everyone, it can save citizens millions. Ben Sevack, Montreal steel manufacturer, tells us (August 12) that Alberta, by leasing oil & gas fields, recovers enough revenue to be the only province in Canada to get by without a sales tax and to levy a flat provincial income tax. While running for re-election, provincial Premier Ralph Klein proposes to abolish their income tax and promises to eliminate medical insurance premiums and use resource revenue to pay for all medical expense for seniors. After all this planned tax-cutting and greater expense, they still expect a large budget surplus. Even places without oil and gas have high site values in their downtowns, and high values in their utility franchises. Recover the values of locations and privileges, displace the harmful taxes on sales, salaries, and structures, then use the revenue to fund basic government and pay residents a dividend, and you have geonomics in action.
a study of Earth’s economic worth, of the money we spend on the nature we use, trillions of dollars each year. We spend most to be with our own kind; land value follows population density. Besides nearness to downtowns, we also pay for proximity to good schools, lovely views, soil fertility, etc. These advantages, sellers did not create. So we pay the wrong people for land. Instead, we should pay our neighbors. They generate land’s value and deserve compensation for keeping off ours, as they’d pay us for keeping off theirs. It’s mutual compensation: we’d replace taxes with land dues – a bit like Hong Kong does – and replace subsidies with “rent” dividends to area residents – a bit like Alaska does with oil revenue. Both taxes and subsidies – however fair or not – are costly and distort the prices of the goods taxed and the services subsidized. By replacing them and letting prices become precise, we reveal the real costs of output, the real values of consumers. Then, just by following the bottom line, people can choose to conserve and prosper automatically. A community could start by shifting its property tax off buildings, onto land – a bit like a score of towns in Pennsylvania do; every place that has done it has benefited.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
You cannot simultaneously prevent and prepare for war.
It could probably be shown by facts and figures that there is no distinctly American criminal class except Congress.
The coldest winter I ever spent was a summer in San Francisco.
Never for the sake of peace and quiet deny your convictions.
If people don’t want to come out to the ball park, nobody’s gonna stop ‘em.
One should be able to see that things are hopeless and yet be determined to make them otherwise. This philosophy fitted on to my early adult life, when I saw the improbable, the implausible, often the “impossible,” come true.
F. Scott Fitzgerald
If God is just, I tremble for my country.
What we plant in the soil of contemplation, we shall reap in the harvest of action.
I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend.
A politician is a fellow who will lay down your life for his country.